                                 CODE OF VIRGINIA

MOTION PICTURE PRODUCTION TAX CREDIT (§ 58.1-439.12:03)

A. For taxable years beginning on and after January 1, 2011, but prior to
January 1, 2027, any motion picture production company with qualifying expenses
of at least $250,000 with respect to a motion picture production filmed in
Virginia shall be allowed a refundable credit against the taxes imposed by §
58.1-320 or 58.1-400 in an amount equal to 15 percent of the production
company&#8217;s qualifying expenses or 20 percent of such expenses if the
production is filmed in an economically distressed area of the Commonwealth. The
Virginia Economic Development Partnership Authority shall designate which areas
of the Commonwealth are deemed to be economically distressed areas. The credit
shall be computed based on all of the taxpayer&#8217;s qualifying expenses
incurred with respect to the production, not just the qualifying expenses
incurred during the taxable year. The refundable tax credits allowed under this
section are for one tax year only. Where a motion picture production continues
for more than one year, a separate application for each tax year the production
continues must be made. The grant of a refundable tax credit for a motion
picture film production does not create a presumption that the production will
receive a refundable tax credit for subsequent tax years. Effective on January
1, 2013, for purposes of eligibility for refundable tax credits, a motion
picture film production shall include digital interactive media production.
			&#8220;Qualifying expenses&#8221; means the sum of the following amounts
spent in the Commonwealth by a production company in connection with the
production of a motion picture filmed in the Commonwealth:

   1. Goods and services leased or purchased. For goods with a purchase price of
   $25,000 or more, the amount included in qualifying expenses is the purchase
   price less the fair market value of the good at the time the production is
   completed.

   2. Compensation and wages, except in the case of each individual who directly
   or indirectly receives compensation in excess of $1 million for personal
   services with respect to a single production. In such a case, only the first
   $1 million of salary shall be considered a qualifying expense. An individual
   is deemed to receive compensation indirectly when a production company pays a
   personal service company or an employee leasing company that pays the
   individual.

B. 1. In addition to the refundable credit authorized under subsection A, such
production company shall be allowed an additional refundable credit equal to 10
percent of the total aggregate payroll for Virginia residents employed in
connection with the production of a film in the Commonwealth when total
production costs in the Commonwealth are at least $250,000 but not more than $1
million. This additional credit shall be equal to 20 percent of the total
aggregate payroll for Virginia residents employed in connection with such
production when total production costs in the Commonwealth exceed $1 million.

   2. In addition to the credits authorized under subsection A and subdivision B
   1, such production company shall be allowed an additional refundable credit
   equal to 10 percent of the total aggregate payroll for Virginia residents
   employed for the first time as actors or members of a production crew in
   connection with the production of a film in the Commonwealth.

C. 1. For purposes of this section, in the case of an episodic television
series, an entire season of episodes shall be deemed to be one production.

   2. No credit shall be allowed under this section for any production that (i)
   is political advertising, (ii) is a television production of a news program or
   live sporting event, (iii) contains obscene material, or (iv) is a reality
   television production.

D. 1. The issuance of refundable tax credits under this section shall be in
accordance with procedures, qualifying criteria, and deadlines established by
the Department and the Virginia Tourism Authority. The qualifying criteria
established by the Virginia Tourism Authority shall take into account whether
the production involves physical production within the Commonwealth of Virginia,
the number of residents of Virginia that will be employed in the production and
the level of compensation they will be paid, the extent to which the production
will contribute to the support and expansion of existing production companies in
Virginia, the extent to which the production will impact existing local
businesses and the local economy, the extent to which the production will
involve existing and new companies located in Virginia, and other relevant
considerations. The taxpayer shall apply for a credit by submitting such forms
as prescribed by the Virginia Tourism Authority, prior to the start of
production in Virginia.

   2. Any taxpayer seeking credits under this section must enter into a
   memorandum of understanding with the Virginia Tourism Authority that at a
   minimum provides the requirements that the taxpayer must meet in order to
   receive the credits, including but not limited to the estimated amount of
   money to be spent in Virginia, the timeline for completing production in
   Virginia, and the maximum amount of credits allocated to the taxpayer.

   3. Once the taxpayer has satisfied all of the requirements in the memorandum
   of understanding to the satisfaction of the Virginia Tourism Authority and
   completed production in Virginia, the Virginia Tourism Authority shall certify
   the final tax credit amount to the taxpayer and to the Tax Commissioner. In
   addition, such certificate shall specify the fiscal year in which such tax
   credit may be refunded by the Department of Taxation. The tax return filed for
   the taxable year in which the Virginia production activities are completed
   shall contain information specifying the amount of tax credit and shall
   specify the fiscal year in which such tax credit may be refunded. The return
   must state the name of the production, provide a description of the
   production, and include a detailed accounting of the qualifying expenses with
   respect to which a credit is claimed.

   4. The Virginia Tourism Authority shall report to the Tax Commissioner on an
   annual basis the amount of tax credits that have been authorized for each
   fiscal year and the amount of tax credits that may be claimed for the current
   fiscal year by each taxpayer.

   5. No interest shall be paid pursuant to &#xA7; 58.1-1833 on any tax credit
   issued by the Department under this section.

E. A taxpayer allowed a credit under this section must maintain and make
available for inspection any information or records required by the Tax
Commissioner. The taxpayer has the burden of proving eligibility for a credit
and the amount of the credit. The Tax Commissioner shall consult with the
Virginia Tourism Authority in order to determine the amount of qualifying
expenses.

F. For purposes of this section, the amount of any credit attributable to a
partnership, electing small business corporation (S corporation), or limited
liability company may be allocated to the individual partners, shareholders, or
members, respectively, in proportion to their ownership or interest in such
business entities.

G. The total amount of credits allocated to all taxpayers under this section
shall not exceed $2.5 million in the 2010-2012 biennium, $5 million in the
2012-2014 biennium, and $6.5 million in fiscal year 2015 and each fiscal year
thereafter.

H. The Department of Taxation, in consultation with the Virginia Tourism
Authority, must publish by November 1 of each year for the 12-month period
ending the preceding December 31 the following information:

   1. Location of sites used in a production for which a credit was claimed;

   2. Qualifying expenses for which a credit was claimed, classified by whether
   the expenses were for goods, services, or compensation paid by the production
   company;

   3. Number of people employed in the Commonwealth with respect to credits
   claimed; and

   4. Total cost to the Commonwealth&#8217;s general fund of the credits claimed.
   				Notwithstanding any provision of &#xA7; 58.1-3 or any other law, such
   information shall be published by the Department, even if such information is
   not classified, so as to prevent the identification of particular taxpayers,
   reports, or returns and items.

I. The Tax Commissioner shall develop guidelines implementing the provisions of
this section, including but not limited to the definition of &#8220;qualifying
expenses&#8221; and setting forth the recordkeeping requirements applicable to
production companies claiming this credit. Such guidelines shall be exempt from
the provisions of the Administrative Process Act (&#xA7; 2.2-4000 et seq.).

HISTORY: 2010, cc. 419, 599; 2014, c. 730; 2017, cc. 108, 425; 2020, cc. 966,
967.